tap's value, page-9

If you're looking to invest in a company that pays a steady dividend - why the heck would you be looking at small or even mid tier oil and gas companies?! LOL - I've never heard of someone looking to invest companies of TAP's size in this sector looking for them to pay out dividends every time they find a bit of oil or gas.

Ask any broker to suggest ten or even 20 stocks to invest in that you can rely on to pay even just an occasional dividend, and I'll be surprised if any would name a small or even mid tier oil or gas company.

If you want a company that pays out every time it makes a bit of cash, stay the heck away from these types of companies!

Never mind the fact that TAP's FID on Manora means it will need to spend about $90 million to develop it. I'd prefer the company to use some of it's cash to develop the project, rather than fiance it completely with expensive debt.

On a serious note, I think the growing costs of developing major projects, and the recent cost blowouts of major projects such as the Gorgon, has put quite a dampener on the appetite of even the major companies on investment in projects that require a large cap ex. This issue is not specific to TAP itself, but the whole industry.

Personally, I'm not really sure how to make an assessment of this kind of risk and the $ impact to valuations, but it's something we should all bear in mind when investing in the energy and resources industry.

It doesn't take a genius to work out that the majors such as RIO and BHP have significantly cut back on projects that require large cap ex, and this all has an impact on valuation.

My valuation is just my view of the company. I can't speak for the rest of the market, but am happy to wait for the catalysts on the near horizon to give the market a good shake and then see what happens.